Savanna Shops New Loft-Style Offices in NY
A Savanna joint venture is offering a newly constructed office building in Manhattan that could fetch $275 million.
The 166,000-square-foot property, at 540 West 26th Street in the West Chelsea neighborhood, is almost entirely occupied by two firms under leases with a weighted average remaining term of 23 years. There is also 7,300 sf of vacant street-level space designed for an art gallery. The building is on the south side of West 26th Street, between 10th and 11th Avenues.
At the estimated value of $1,650/sf, the buyer’s initial annual yield would be 5%. That’s higher than typical for a core office investment in Manhattan. Cushman & Wakefield is representing Savanna, a New York fund shop, and its partner, the Silvermintz family of New York.
The Savanna team pre-leased half of the nine-story building to a school that offers classes from nursery level through the 12th grade. The 85,000-sf lease runs until 2045. The space supplements the main building of the school, which is called Avenues: The World School.
The remaining 73,000 sf of office space is leased to Roc Nation, an entertainment company founded by music impresario Jay-Z, until 2036. Roc Nation’s lease is guaranteed by parent Live Nation Entertainment, which is rated Ba3/BB- by Moody’s and S&P.
The retail space could generate another $1.5 million of revenues. There are a number of art galleries in the area.
The loft-style property, which was completed this year, features column-free floor plates, floor-to-ceiling windows, terraces on most floors and rooftop amenities.
The marketing campaign highlights the fact that West Chelsea has just 10 Class-A buildings, including Savanna’s. Those properties, which encompass 5.1 million sf of office space, are 99% occupied at an average asking rent of $93.21/sf. That exceeds the 95.2% average occupancy rate and $84.05/sf average rent in the surrounding Midtown South submarket.
The Silvermintz family formerly owned the site by itself. Savanna acquired an unspecified stake in 2014 for $24.7 million, according to the Commercial Observer.